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The Government has drawn up contingency plans for Carillion's collapse, it admitted on Wednesday, as investors await news of the outcome of crunch talks between the contractor and lenders over its future.

Cabinet Office parliamentary secretary Oliver Dowden said: "We of course make contingency plans for all eventualities … Carillion is a major supplier to the Government with a number of long-term contracts."

Carillion employs around 20,000 people across the UK and is one of the key UK government contractors, working on high-profile projects such as the HS2 rail link.

The company has been in crisis since last July, when it issued a shock profit warning on the back of an £845m writedown and its...